State Officials Urge Deep Cuts To $414M Storm Cost Request From CL&P

State officials cut deep into Connecticut Light & Power's request to get reimbursed $414 million for its work during Tropical Storm Irene, the October Nor'easter, storm Sandy, and other storms.

Briefs filed Friday by several state offices suggested cutsranging from $82 million to $146 million on the grounds that a number of the utility's costs don't qualify under state regulations.

"This could be the new order of things, so it behooves us on the first major one to go through it with a fine-toothed comb," Consumer Counsel Elin Swanson Katz said in an interview Friday.

Connecticut Light & Power, a division of Northeast Utilities, requests that regulators approve the total costs, saying they were "necessary and reasonably incurred" as the utility brought in thousands of outside tree and line crews to replace thousands of utility poles and transformers and miles of wire during the storms.

Regulators plan to issue a draft decision in the matter in late December.

Generally speaking, utilities can recover the reasonable costs of a major storm, if it's found that the company responded prudently. Were the state to approve the entire storm cost, a typical bill — for a residential ratepayer using 700 kilowatt hours a month — would rise $3 a month for the next six years, according to the company, though commercial customers and heavy residential users would likely pay more.

The recommendations to cut the utility's request came as the state's attorney general, the consumer counsel and the regulators' prosecutorial office filed briefs at the end of a four-month investigation. Officials weighed hundreds of customers' complaints, hundreds of questions to the utility, and hours of expert testimony.

The state officials' reasons for lowering CL&P's reimbursement for the storms include:

— A reduction of $20.5 million for costs that they said should not qualify: bonuses to management; cost of ordinary supplies, like boots or tools; work on customer equipment; restoration work that AT&T should repay CL&P for, according to a contract; and a chunk of funds that should have come from a regional storm reserve fund.

— Disallowance of $16.3 million in federal tax benefits relating to the storm damages.

— A finding that prior to the storm the company didn't spend enough on tree-trimming, costing $21.3 million.

— Changes in how some costs, such as vehicle costs and payroll overheads, from the storms are categorized, resulting in a reduction of $13.5 million.

— A reduction of $34.1 million in company costs relating to outside contractors.

— A disallowance of $1.59 million for not counting some costs from two smaller June 2011 storms that were counted as one storm by CL&P. Individually, the storms didn't meet regulators' definition of a "major storm," which would approve their costs for recovery.

— A reduction of $18.9 million as a consequence of poor cross-arm maintenance before the 2011 storms.

— A reduction of $25 million relating to the company's choice to not pursue repayment from insurers some costs.

State Attorney General George Jepsen said in a filing with the state Public Utilities Regulatory Authority that the utility's performance "turned extended power outages into crisis situations, caused significant public anxiety and severely impacted residents' and towns' abilities to effectively deal with the outages."

His recommendation is that regulators disallow 30 percent to 50 percent of the company's costs relating to Tropical Storm Irene and the October Nor'easter — both in 2011 — because of the utility's "deficient and inadequate response" to those events.

In March, CL&P filed its application with regulators to recover the costs it incurred during five storms it deemed major in 2011 and 2012, at a costs of $462 million — including $111 million on Irene, $175 million on the October 2011 snowstorm and $156 million on Sandy a year later. The total sought by the company — $414 million — is minus $40 million the company set aside as part of its 2012 merger with Boston-based NSTAR and other reductions.

Last year, regulators said in a report on the two 2011 storms that CL&P's restoration performance was "deficient and inadequate." In that decision, however, it said it would reflect on that performance when deciding whether ratepayers should foot the whole bill. In that report, Art House, the authority's chairman, said that PURA would be "fair and reasonable" when deciding whether to dock any of the storm costs.